What is the financial threshold for an unsatisfied judgment against an Angry Chickz franchisee that would trigger automatic termination?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
d holders shall reexecute a written guaranty in a form prescribed by Company.
ARTICLE 14 DEFAULT AND TERMINATION
- 14.1 General. Company shall have the right to terminate this Agreement only for "cause". "Cause" is hereby defined as a default of this Agreement. Company shall exercise its right to terminate this Agreement in the following circumstances and manners.
- 14.2 Automatic Termination Without Notice. Subject to Applicable Laws of the jurisdiction in which the Franchised Business is operated to the contrary, Franchisee shall be deemed to be in default under this Agreement, and all rights granted herein shall at Company's election automatically terminate without notice to Franchisee if: (i) Franchisee shall be adjudicated bankrupt or judicially determined to be insolvent (subject to any contrary provisions of Applicable Law), shall admit to its inability to meet its financial obligations as they become due, or shall make a disposition for the benefit of its creditors; (ii) a judgment against Franchisee in the amount of more than $25,000 remains unsatisfied for a period of more than 30 days (unless an appeal bond has been filed); (iii) the Franchised Business, the Premises, or any of the Assets are seized, taken over or foreclosed by a government official in the exercise of its duties, or seized, taken over, or foreclosed by a creditor or lienholder provided that a final judgment against the Franchisee remains unsatisfied for 30 days (unless an appeal bond has been filed); (iv) a levy of execution or attachment has been made upon the license granted by this Agreement or upon any of the Assets, and it is not discharged within 5 days of such levy or attachment; (v) Franchisee permits any recordation of a notice of mechanics lien against the Franchised Business or
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, a franchisee faces automatic termination without notice if a judgment against them exceeds $25,000 and remains unsatisfied for more than 30 days. However, this termination is not automatic if the franchisee files an appeal bond.
This clause in the franchise agreement is designed to protect Angry Chickz from franchisees who are in significant financial distress. Unsatisfied judgments of this magnitude can indicate severe financial instability, which could negatively impact the Angry Chickz brand and its reputation. The 30-day period provides a short window for franchisees to resolve the judgment or file an appeal, showing due process.
For a prospective Angry Chickz franchisee, this means maintaining sound financial management is crucial. They should ensure they have sufficient resources to cover potential liabilities and legal judgments. Additionally, understanding the legal options available, such as appeal bonds, is important in case of adverse judgments. This provision is fairly standard in franchise agreements, as franchisors need to safeguard their brand and system from financial risks associated with individual franchisees.